XI.

Contracts contract was executed in New York, CFI-Manila has no jurisdiction over
this case.
King Mau Wu v Sycip Issue: W/N CFI Manila has jurisdiction herein, despite the execution of the contract
in New York. (YES)
Doctrine: Contracts executed in foreign country, cognizable by local courts; no
conflict of laws where question involved is to enforce obligation arising from Held:
contract.
(1) Although the contract of agency was executed in New York, CFI Manila
has jurisdiction to try a personal action for the collection of a sum of
Facts:
money arising from such contract, because a non-resident may sue a
resident in the courts of this country where the defendant may be
(1) This claim involves an action filed by King Mau Wu to collect P59,082.92 with
summoned and his property leviable upon execution in case of a
interests, arising out of a shipment of 1,000 tons of coconut oil emulsion sold
favorable, final and executory.
by King, as agent of the Sycip, to Jas. Maxwell Fassett, who in turn assigned it
(2) There is no conflict of laws involved in this case because it is only a
to Fortrade Corporation.
question of enforcing an obligation created by or arising from contract,
(2) Under an agency agreement set forth in a letter in New York addressed to and
and unless the enforcement of the contract be against public policy of the
accepted by Sycip, King was made the executive agent of Sycip in the sale of
forum, it must be enforced.
Philippine coconut oil and its derivatives outside the Philippines, and was to be
(3) As to the merits of the case, there can be no doubt that the sale of the
paid 2½% on the total actual sale price of sales obtained through his efforts,
1,000 metric tons of coconut oil was not a separate and independent
and in addition thereto, 50% of the difference between the authorized sale
contract from that of the agency agreement.
price and the actual price.
o This is proven by 2 letters and a telegram written by Sycip, wherein
(3) After trial, the Court rendered judgment as prayed for in the complaint in
he himself confirmed the said transaction and King’s commission.
favor of King.
o The letter upon which Sycip relies for his defense is one of the
(4) Sycip filed a motion for new trial based on newly discovered evidence, which
several drafts which led to the execution of the agency agreement.
consists of:
Although such letter does not stipulate on the commission to be paid
a. Duplicate original of a letter covering the sale of 1,000 tons of coconut
to King as agent, yet if he paid King a 2½% commission on the first 3
oil soap emulsion signed by Maxwell to Sycip;
coconut emulsion shipments, there is no reason why he should not
b. L/C of Chemical Bank & Trust Company in favor of Maxwell, and assigned
pay him the same commission on the last shipment.
to Sycip;
Disposition: Hence, King is entitled to collect 7,598.88 for commission and P50,000
c. A letter by the Fortrade Corporation to Maxwell, whereby Fortrade
placed a firm order of 1,000 metric tons of coconut oil soap emulsion for ½ of the overprice or a total of P57,589.88, with lawful interests.
and Maxwell accepted.
(5) However, the motion was denied. Hence, Sycip appealed from the said 2. Pakistan International Airlines Corporation vs. Hon. Blas F. Ople
judgment. G.R. No. 61594, September 28, 1990
(6) Both parties are agreed that the only transaction or sale made by King, as 190 SCRA 90
agent of Sycip, was that of the subject coconut oil. Petition for certiorari to review the order of the Minister of Labor.
a. King still maintains that he is entitled to the claimed commissions.
b. Sycip contends that the coconut oil transaction as aforementioned was
not covered by the agency contract as it formed part of an independent FACTS:
and separate transaction, agreed upon on an earlier date, for which King On 2 December 1978, petitioner Pakistan International Airlines Corporation (PIA), a
has already been compensated. Moreover, he contends that as the foreign corporation licensed to do business in the Philippines, executed in Manila
two (2) separate contracts of employment, one with private respondent Ethelynne
B. Farrales and the other with private respondent Ma. M.C. Mamasig. The contracts
became effective on 9 January 1979 and provided for the duration of employment
and penalty, termination and the applicable law which is of Pakistan’s. They were
trained in Pakistan and worked as flight attendants with base station in Manila and
flying assignments to different parts of the Middle East and Europe.
A year and four (4) months prior to the expiration of the contracts of employment,
they received separate letters informing them that their services would be
terminated.
Private respondents Farrales and Mamasig jointly instituted a complaint for illegal
dismissal and non-payment of company benefits and bonuses, against PIA with the
then Ministry of Labor and Employment. Several attempts at conciliation were not
fruitful.
ISSUES:
1. Whether or not the Regional Director, MOLE, had jurisdiction over the
subject matter of the complaint initiated by private respondents for
illegal dismissal, jurisdiction over the same being lodged in the Arbitration
Branch of the National Labor Relations Commission (“NLRC”).
2. Whether or not the order of the Regional Director had been issued in
violation of petitioner’s right to procedural due process.
3. Whether or not the employment contract is the governing law between
the parties and not the provisions of the Labor Code.
4. ADR ISSUE: WON the provision in the contract that the venue for
settlement of any dispute arising out of or in connection with the
agreement is to be resolved only in courts of Karachi Pakistan is valid.
RULING:
1. At the time the complaint was initiated in September 1980 and at the time the
Orders assailed were rendered on January 1981 (by Regional Director Francisco L.
Estrella) and August 1982 (by Deputy Minister Vicente Leogardo, Jr.), the Regional
Director had jurisdiction over termination cases. Art. 278 of the Labor Code, as it
then existed, forbade the termination of the services of employees with at least
one (1) year of service without prior clearance from the Department of Labor and
Employment.
2. No. Petitioner was given an opportunity to submit its position paper and
evidence they had.
3. The principle of party autonomy in contracts is not an absolute principle. The
rule in Article 1306 of the Civil Code is that the contracting parties may establish
such stipulations as they may deem convenient, “provided they are not contrary to
law, morals, good customs, public order or public policy.” Thus, counter-balancing
the principle of autonomy of contracting parties is the equally general rule that
provisions of applicable law, especially provisions relating to matters affected with
public policy, are deemed written into the contract. The law relating to labor and
employment are impressed with public interest. Paragraph 5 of that employment
contract was inconsistent with Articles 280 and 281 of the Labor Code and thus,
cannot be given effect.
4. These circumstances – the employer-employee relationship between the parties;
the contract being not only executed in the Philippines, but also performed here, at
least partially; private respondents are Philippine citizens and petitioner, although
a foreign corporation, is licensed to do business and actually doing business and
hence resident in the Philippines; lastly, private respondents were based in the
Philippines in between their assigned flights to the Middle East and Europe – show
that the Philippine courts and administrative agencies are the proper fora for the
resolution of contractual disputes between the parties. The employment
agreement cannot be given effect so as to bar Philippine agencies and courts
vested with jurisdiction by Philippine law. Moreover, PIA failed to plead and
proved the contents of Pakistan law on the matter, it is therefore presumed that
the applicable provisions of the law of Pakistan are the same as the applicable
provisions of Philippine law. Hence, the provision in the contract that the venue for
settlement of any dispute arising out of or in connection with the agreement is to
be resolved only in courts of Karachi Pakistan is not valid.
Contracts; Parties may not contract away applicable provisions of law especially
peremptory provisions dealing with matters heavily impressed with public interest.
The principle of party autonomy in contracts is not absolute. – A contract freely
entered into should, of course, be respected, as PIA argues, since a contract is the
law between the parties. The principle of party autonomy in contracts is not,
however, an absolute principle. The rule in Article 1306, of our Civil Code is that the
contracting parties may establish such stipulations as they may deem convenient,
“provided they are not contrary to law, morals, good customs, public order or
public policy.” Thus, counter-balancing the principle of autonomy of contracting
parties is the equally general rule that provisions of applicable law, especially
provisions relating to matters affected with public policy, are deemed written into
the contract. Put a little differently, the governing principle is that parties may not
contract away applicable provisions of law especially peremptory provisions dealing
with matters heavily impressed with public interest. The law relating to labor and
employment is clearly such an area and parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws and regulations by
simply contracting with each other. It is thus necessary to appraise the contractual
provisions invoked by petitioner PIA in terms of their consistency with applicable
Philippine law and regulations.
3. Continental Micronesia v. Basso
GR No. 178382-83
Labor Relations: Jurisdiction
Facts:
Petitioner Continental Micronesia is a foreign corporation organized and existing
under the laws of and domiciled in the United States of America. It is licensed to do
business in the Philippines. Respondent, a US citizen residing in the Philippines,
accepted an offer to be a General Manager position by Mr. Braden, Managing
Director-Asia of Continental Airlines. On November 7, 1992, CMI took over the
Philippine operations of Continental, with respondent retaining his position as
General Manager. Thereafter, respondent received a letter from Mr. Schulz, who
was then CMI’s Vice President of Marketing and Sales, informing him that he has
agreed to work in CMI as a consultant on an “as needed basis.” Respondent wrote
a counter-proposal that was rejected by CMI.
Respondent then filed a complaint for illegal dismissal against the petitioner
corporation. Alleging the presence of foreign elements, CMI filed a Motion to
Dismiss on the ground of lack of jurisdiction over the person of CMI and the subject
matter of the controversy.
The Labor Arbiter agreed with CMI that the employment contract was executed in
the US “since the letter-offer was under the Texas letterhead and the acceptance of
Complainant was returned there.” Thus, applying the doctrine of lex loci
celebrationis, US laws apply. Also, applying lex loci contractus, the Labor Arbiter
ruled that the parties did not intend to apply Philippine laws.
The NLRC ruled that the Labor Arbiter acquired jurisdiction over the case when CMI
voluntarily submitted to his office’s jurisdiction by presenting evidence, advancing
arguments in support of the legality of its acts, and praying for reliefs on the merits
of the case.
The Court of Appeals ruled that the Labor Arbiter and the NLRC had jurisdiction
over the subject matter of the case and over the parties.
Issue:
Whether labor tribunals have jurisdiction over the case.
Held:
Yes. The Court ruled that the labor tribunals had jurisdiction over the parties and
the subject matter of the case. The employment contract of Basso was replete with
references to US laws, and that it originated from and was returned to the US, do
not automatically preclude our labor tribunals from exercising jurisdiction to hear
and try this case.
On the other hand, jurisdiction over the person of CMI was acquired through the
coercive process of service of summons. CMI never denied that it was served with
summons. CMI has, in fact, voluntarily appeared and participated in the
proceedings before the courts. Though a foreign corporation, CMI is licensed to do
business in the Philippines and has a local business address here. The purpose of
the law in requiring that foreign corporations doing business in the country be
licensed to do so, is to subject the foreign corporations to the jurisdiction of our
courts.
Where the facts establish the existence of foreign elements, the case presents a
conflicts-of-laws issue. Under the doctrine of forum non conveniens, a Philippine
court in a conflict-of-laws case may assume jurisdiction if it chooses to do so,
provided, that the following requisites are met: (1) that the Philippine Court is one
to which the parties may conveniently resort to; (2) that the Philippine Court is in a
position to make an intelligent decision as to the law and the facts; and (3) that the
Philippine Court has or is likely to have power to enforce its decision. All these
requisites are present here.